Word: citicorp
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...bank earnings. After having been severely depressed during the summer, bank shares are among the hottest stocks in the current Wall Street rally. As the Dow Jones industrial average reached 1,037 last week for its highest close in nearly a decade, shares of New York's Citicorp gained 5⅞ points, to 38%, and Chase Manhattan was up 5½ points, to 54%. Prices of the 24 bank stocks included in an index compiled by the Keefe, Bruyette & Woods investment firm are 46% higher than their summer lows. Despite the outwardly convivial atmosphere, however, an undercurrent of unease...
...moment, though, the officers of many of the biggest U.S. banks were beaming about their third-quarter profit performances. Citicorp reported a July-September operating income of $210 million, a 56% gain over the same period a year ago. San Francisco's Wells Fargo Bank scored a 38% earnings rise for the quarter, and at Pittsburgh's Mellon Bank profits were up 35%. Even Chase Manhattan, which lost $16 million in the second quarter, managed to post earnings of $124 million, 7% higher than a year...
Earnings from the wider interest-rate spreads masked an alarming rise in losses from bad loans. Chase Manhattan wrote off loans of $68 million in the quarter, compared with $24 million in lending losses during the same period a year ago. Citicorp's write-offs were up 84%, to $103 million. At the Bank America Corp., loan losses of $110 million were serious enough to depress overall profits by 14%, to $103 million...
Though concerned about loan losses, most bankers bristle at the suggestion that the stability of the financial system may be in danger. Says Walter Wriston, chairman of Citicorp: "Every major bank in America last year made more money than General Motors, Ford and Chrysler combined. They lost more than $1 billion. But if one bank out of 15,000 loses money for one quarter, it looks like the end of the world to people." Most Washington officials share the bankers' confidence. Says a member of the Federal Reserve Board: "Even the relatively few banks that have been hardest...
...loans have multiplied, raising fears of a kind of domino effect of international banking collapses. That grim prospect came uncomfortably close to actuality last month when Mexico declared it could not make its payments. Such action would have left such blue-chip U.S. lenders as BankAmerica, Chase Manhattan and Citicorp holding bad loans of more than $10 billion...